Building back better: economic responses to 21st-century crises

Against the background of an increasingly pressing climate change emergency, the Great Financial Crisis (2008-9) and the COVID Recession (2020-1) have raised questions and aspirations about the meaning of work, wellbeing, and fairness – and about which governance systems (traditional Western democracies; populist regimes; one-party systems) are best suited to offer satisfactory solutions. This course provides an economic overview of the debate, focusing on metrics of economic performance and human wellbeing (Gross Domestic Product, Human Development Index, income and wealth distribution measures), and on the key policy instruments involved in “building back better” (traditional demand and supply policies, taxation, “nudge”).

The Great Financial Crisis (2008-9), the COVID Recession (2020-1), and the increasing realisation that the global economy has been drinking at the environmental last chance saloon, have raised fundamental questions about the purpose and meaning of work, the relationship between material prosperity and wellbeing, and the importance of fairness.  

Moreover, current geopolitical instability and the prospect of a fragmentation of the global economy into mutually isolated and hostile blocs have made economic interdependence on a global scale appear much less attractive – companies and governments may increasingly “friendshore” rather than “offshore”.  

This course provides an economic overview of the debate about “building back better”.  It first looks at the institutional and economic characteristics of a previous episode of prolonged economic prosperity accompanied by social progress – the 1945-1973 Reconstruction Years and Golden Age across America and Western Europe. We then reflect on the peculiar nature of the three last major  disruptions which have battered the world economy in recent year, from the 2008-9 Great Financial Crisis to the 2020-21 COVID shutdown, to the looming stagflationary recession of 2022, and the limitations of existing macroeconomic stabilisation frameworks in containing the resulting instability and its aggregate welfare costs.  

Beyond the acknowledge need to adapt traditional economic management instruments to deal with the peculiar nature of recent shocks, we also document the widespread if often unfocussed aspiration for a different model of economy and society, a “great reset” of both work-life balance and the meaningfulness and sustainability of human work.  

Finally, we ask which governance systems (traditional Western democracies; populist regimes; one-party systems) may be best suited to offer satisfactory solutions to these challenges. 

Learning outcomes

The learning outcomes for this course are:

• an understanding of the scope for macroeconomic stabilisation in response to shocks  
• an analysis of the relationship between the key traditional measure of economic success (Gross Domestic Product), human development, and wellbeing  
• a critical review of the ways in which the key aspirations for greater economic stability, environmental sustainability, and economic inclusion have been addressed within the post-COVID recovery strategies of key countries. 

Classes

1. Building Back Better – the last time around.
This class sets our present predicament against the historical background of the “Golden Age” of fast post-war economic growth and active government involvement in the economy across Western Europe  

2. Macroeconomic stabilisation for unconventional shocks.
The Great Financial Crisis of 2008-9, the COVID shutdowns of 2020-21, and (to a lesser extent) the cost-push inflation of 2022 have been seen as “unprecedented”, whether because of the nature of the shock, the structure of the economy upon which they hit, or both. The resulting challenges for monetary and fiscal policy are discussed in this class.  

3. Are the days of GDP really counted?
Since at least Tibor Scitovsky’s analysis of “the joyless economy” in the mid-1976, a number of critiques of Gross Domestic Product as measure of a country’s success have been developed, focussing in particular on the lack of explicit consideration of inequality, environmental sustainability, quality of life (as opposed to consumption).  More recently, a major underpinning of GDP growth – international specialisation on a global scale, and a correspondingly extreme degree of interdependence – has been questioned as a cause of a country’s “vulnerability” to geopolitical instability.  

4. The Great Reset: the experience of work after COVID.
Is work a place we go to, or something we do from wherever we happen to be? Is flexicurity a possibility, or is the choice increasingly between secure fulltime and “gigs”? Is there enough work to go around, and if not, do we need other mechanisms to ensure not just survival but freedom (in Amartya Sen’s sense) for all?  We examine how the experience of working from home, furlough etc. has revived old questions and raised new ones.  

5. Is There an Alternative?
The governments of the Golden Age approached the great social questions of that time with the confidence borne out of their success in governing complex and highly stressed war economies; in contrast, today’s governments are the inheritors of a collapsing neo-liberal order and often of dysfunctional democratic politics. Can empowered consumers and socially responsible corporations come to the rescue? 

Required reading  

OECD (2021) “Building Back Better: a Sustainable, Resilient Recovery after COVID-19”, Organisation for Economic Co-operation and Development.  

Coyle, Diane (2015) GDP: a Brief but Affectionate History, Princeton University Press [ISBN: 9780691169859]  

Gerstle, Gary (2022) The Rise and Fall of the Neoliberal Order: Part 2. [ISBN: 9780197519646]  

Also review Video links on VLE

Typical week: Monday to Friday

For each week of study you select a morning (Am) and an afternoon (Pm) course, each course has five sessions, one each day Monday to Friday. The maximum class size is 25 students. Your weekly courses are complemented by a series of two daily plenary lectures, exploring new ideas in a wide range of disciplines. To add to the learning experience, we are also planning additional evening talks and events.

Evaluation and Academic Credit 

If you are seeking to enhance your own study experience, or earn academic credit from your Cambridge Summer Programme studies at your home institution, you can submit written work for assessment for one or more of your courses. 

Essay questions are set and assessed against the University of Cambridge standard by your Course Director, a list of essay questions can be found in the Course Materials. Essays are submitted two weeks after the end of each course, so those studying for multiple weeks need to plan their time accordingly. There is an evaluation fee of £65 per essay.

For more information about writing essays see Evaluation and Academic Credit.

Certificate of attendance

A certificate of attendance will be sent to you electronically within a week of your courses finishing.